We have audited the accompanying financial statements of BIRLA POWER SOLUTIONS
LIMITED ("the Company") which comprise the Balance Sheet as at March 31,
2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and other explanatory information.

Management`s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a
true and fair view of the financial position, financial performance and cash flows of the
Company in accordance with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant to the preparation
and presentation of the financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.

Auditor`s Responsibility

Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor`s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company`s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations
given to us, the financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March
31, 2013;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on
that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor`s Report) Order, 2003 ("the Order")
issued by the Central Government of India in terms of sub-section (4A) of section 227 of
the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and
5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the
Company so far as appears from our examination of those books ;

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with
by this Report are in agreement with the books of account ;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement comply with the Accounting Standards referred to in sub-section (3C) of section
211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31,
2013, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2013, from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which
the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any
Rules under the said section, prescribing the manner in which such cess is to be paid, no
cess is due and payable by the Company.

For THAKUR VAIDYANATH AIYAR & Co.

CHARTERED ACCOUNTANTS

Firm Reg. No. 000038N

Place: Mumbai

C V Parameswar

Date: 28th May, 2013

Partner

Membership No. 11541

ANNEXURE TO INDEPENDENT AUDITORS REPORT

(REFFERED TO IN PARAGRAPH 1 UNDER THE HEADING OF "REPORT ON OTHER LEGAL AND
REGULATORY REQUIREMENT" OF OUR REPORT OF EVEN DATE)

1. (a) The Company is maintaining proper records showing full particulars, including
quantitative details and situation, of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Management
during the year under a program of verification laid down and no material discrepancies
between the book records and the physical inventory have been noticed. In our opinion, the
frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, a
substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified
by the management during the year. In respect of inventory lying with third parties, these
have been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by
the Management are reasonable and adequate in relation to the size of the Company and the
nature of its business.

(c) On the basis of our examination of inventory records, in our opinion, the Company
is maintaining proper records of inventory. As informed to us no material discrepancies
were noticed on physical verification.

3. (a) The Company has granted loans to four Companies covered in the register
maintained under Section 301 of the Act. The maximum amount outstanding at any time during
the year was Rs.1329.26 lacs and the year end balance is Rs 1244.31 lacs.

(b) In our opinion, the rate of interest and other terms and conditions of such loans
are not prima facie prejudicial to the interest of the Company.

(c) In respect of the aforesaid loans, the Companies are repaying the principal amount
wherever stipulated and are also regular in payment of interest.

(d) In respect of the aforesaid loans, there are no overdue amounts.

(e) The Company has taken unsecured loans from two Companies covered in the register
maintained under Section 301 of the Act. The maximum amount outstanding at any time during
the year was Rs.1037.89 lacs and the year end balance is Rs 1022.45 lacs.

(f) In our opinion the rate of interest and other terms and conditions of such loans
are not prima facie prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repaying the principal
amount wherever stipulated and is also regular in payment of interest.

4. In our opinion and according to the information and explanations given to us, there
is an adequate internal control system commensurate with the size of the Company and the
nature of its business for the purchase of inventory, fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the books and records of
the Company, and according to the information and explanations given to us, we have
neither come across nor have been informed of any continuing failure to correct major
weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us,
the particulars of contracts or arrangements referred to in Section 301 of the Act have
been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the
transactions made in pursuance of such contracts or arrangements and exceeding the value
of Rs five lacs in respect of any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, in
respect of compliance by the Company with the provisions of Section 58A and 58AA or any
other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules,
1975 with regard to the deposits accepted from the public, we have to state that these
have not been complied with. The non compliance relates to non repayment of the deposits
on the due date, non payment of interest which has become due for payment, non maintenance
of liquid assets to the extent required by Rule 3A of the Companies(Acceptance of
Deposits)Rules, 1975, acceptance of fresh deposits even after the Company defaulted in
repayment of earlier deposits, non intimation to the Company Law Board regarding default
in compliance with the provisions of Section 58AA of the Companies Act, 1956 as well as
non compliance with the orders passed by the Company Law Board in regard to refund of
certain deposits and interest thereon.

7. In our opinion, the Company has an internal audit system commensurate with its size
and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respect
of products where, pursuant to the Rules made by the Central Government of India, the
maintenance of cost records has been prescribed under clause (d) of sub-section (1) of
Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have, however, not made a detailed
examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the
Company examined by us, in our opinion, except for dues in respect of Income Tax, Sales
Tax and Service tax, the Company is generally regular in depositing the undisputed
statutory dues including provident fund, Investors Education and Protection Fund, wealth
tax, excise duty, custom duty, cess and other material statutory dues as applicable, with
the appropriate authorities. The extent of the arrears of Income Tax, Sales Tax and
Service

Tax, outstanding as at March 31, 2013, for a period of more than six months from the
date they became payable are as follows:

Sr. No

Name of the Statute

Nature of dues

Amount (Rs lacs.)

Period to which the amount relates

1

Sales Tax Acts

Sales Tax

45.42

Upto 30th September 2012

2

Income Tax Act, 1961

Dividend Distribution Tax (including interest)

321.38

2010-11

3

Service Tax

Service provider/ Service receiver

20.78

2011-12

(b) According to the information and explanations given to us and the records of the
Company examined by us, there were no disputed dues in respect of Income-tax, Wealth-tax,
Service-tax, Custom duty, Excise duty and Cess. The particulars of dues of Sales-tax as at
March 31, 2013, which have not been deposited on account of disputes, are as follows:

Sr. No.

Name of Statute

Nature of Dues

Amount (Rs. in Lacs)

Forum where dispute is pending.

1

Delhi Sales Tax Act

Sales Tax

3.77

Jt. Commissioner / Dy. Commissioner

2

Uttar Pradesh Sales Tax Act

Sales Tax

63.63

Tribunal

3

Kerala Sales Tax Act

Sales Tax

79.98

Tribunal / Dy. Commissioner /

4

Tamilnadu Sales Tax Act

Sales Tax

18.57

Tribunal

5

Bihar Sales Tax Act

Sales Tax

7.69

Jt. Commissioner Appeals

6

West Bengal Sales Tax Act

Sales Tax

9.42

Directorate of commercial taxes / Revisionary Board

7

Orissa Sales Tax Act

Sales Tax

1.29

Jt. Commissioner / Commissioner

8

Gujarat Sales Tax Act

Sales Tax

2.25

Dy. Commissioner

9

Uttarakhand Sales Tax Act

Sales Tax

48.60

Commissioner

Total

235.20

10. The Company has no accumulated losses as at March 31, 2013 and it has not incurred
cash losses in the financial year ended on that date or in the immediately preceding
financial year.

11. According to the records of the Company examined by us and the information and
explanations given to us, the Company has not defaulted in repayment of dues to any
financial institution or bank or debenture holders as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual
benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities,
debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from banks or financial
institutions during the year.

16. The Company has not obtained any term loans during the year.

17. On the basis of an overall examination of the balance sheet of the Company, in our
opinion and according to the information and explanations given to us, there are no funds
raised on short term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and
companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by way of public issue during the year.

21. During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across any
instance of fraud on or by the Company, noticed or reported during the year, nor have we
been informed of such case by the Management.